The Internal Revenue Service raised the amount that individuals can contribute to their 401(k) plans in 2025 to $23,500 from $23,000 in 2024, it said on Friday. The increase applies to other workplace plans, including 403(b)s, governmental 457 plans and the federal Thrift Savings Plan.

In addition, the limit on annual contributions to an individual retirement account will remain exchanged at $7,000.

And, starting next year, the catch-up contribution limit for 401(k) plans will also stay at $7,500 for those aged 50 and older, the IRS said in a statement. However, under the Secure 2.0 Act of 2022, individuals aged 60 to 63 will be able to contribute an additional $11,250. Both these amounts exceed the general deferral cap of $23,500 for 2025.

The change comes shortly after the IRS introduced numerous inflation adjustments for 2025, such as increased capital gains thresholds, a higher estate and gift tax exemption, revised eligibility for the earned income tax credit, and several others.

Meanwhile, amid the equities bull market, a third consecutive quarter of retirement-savings growth created 497,000 so-called 401(k) millionaires in Q2, according to Fidelity Investments.